Virgin Galactic Seeks To Raise $300M to Accelerate Spaceplane and Mothership Production

Virgin Galactic has announced plans to raise an additional $300 million to fast-track the production of its suborbital spaceplanes and a new mothership. This move, intended to support the company’s long-term growth, was discussed in a Nov. 6 earnings call detailing the spaceflight company’s third-quarter financial results.

Expansion of Delta-Class Fleet and Mothership

Virgin Galactic currently has two Delta-class spaceplanes under development, which remain on budget and on schedule, according to company executives. However, the company now aims to accelerate the production timeline for two additional spaceplanes and a second mothership.

The first Delta-class spaceplane is set to begin commercial flights in 2026, with the additional vehicles entering service two years earlier than previously anticipated.

“We have an exciting opportunity to capture economies of scale from our existing investments,” - Michael Colglazier, Virgin Galactic’s CEO

Financial Strategy and Economic Projections

Virgin Galactic’s initial plan was to fund future vehicles with revenue generated from the operations of its first two Delta-class spaceplanes. However, the proposed capital injection will expedite the development of a second mothership and two more spaceplanes, with commercial service now expected by 2028.

According to Doug Ahrens, the company’s CFO, the expanded fleet will enable the “full utilization” of Spaceport America in New Mexico.

“That would double the revenue over a two-spaceplane facility but quadruple earnings before interest, taxes, depreciation, and amortization (EBITDA) because fixed costs are spread over more flights.” - Doug Ahrens, Virgin Galactic CFO

Having a fully operational spaceport could generate enough cash flow to fuel Virgin Galactic’s planned expansion to additional spaceports worldwide, a vision the company previously mentioned in its August earnings call.

Financing and Development Timeline

To support this accelerated plan, Virgin Galactic will seek to raise $300 million, but the company has “flexibility” in timing given its current cash reserves.

Virgin Galactic reported $744 million in cash and equivalents at the end of the third quarter, sufficient to complete the first two Delta-class vehicles, which are expected to generate positive cash flow for the company.

A significant portion of the new capital will fund the development of the second mothership, a project expected to commence design work in 2025, with production starting in 2026 and testing in 2027. Commercial service for this new aircraft is projected to begin in 2028.

The mothership, which will resemble Virgin’s current aircraft, VMS Eve, will be built internally by Virgin’s engineering team, which will transition to this project after completing work on the Delta-class spaceplanes.

This development comes after a legal dispute with Aurora Flight Sciences, a Boeing subsidiary initially contracted to produce new motherships. Virgin Galactic and Boeing resolved their conflict on Oct. 31, and Boeing’s lawsuit was dismissed on Nov. 4, according to a 10-Q filing with the Securities and Exchange Commission.

Progress on Delta-Class Spaceplanes

The first two Delta-class spaceplanes are currently in development and are "progressing well", with Bell Textron and Qarbon Aerospace making advancements on the tools and parts for the spaceplanes. The company expects to begin assembly of the first Delta-class vehicle in the first quarter of 2025 at its new Phoenix facility, with ground testing planned for later that year.

Although there have been some design revisions with subcontractors Bell and Qarbon to address component development challenges, the adjustments have not disrupted the timeline.

“Together, we’ve been able to resequence elements within our build planning to maintain overall program momentum and delivery within our expected timelines,” - Doug Ahrens, Virgin Galactic CFO

Financial Performance

In the third quarter, Virgin Galactic reported $402,000 in revenue and a net loss of $74.5 million, underscoring the importance of increased revenue and cash flow as the company scales up operations.

Virgin Galactic’s plan to raise $300 million marks a decisive step toward its goal of becoming a leader in the commercial suborbital spaceflight market. By accelerating its fleet expansion, the company aims to enhance its financial sustainability while positioning itself for further growth through expanded facilities worldwide.